Gold Set to Claim Third Straight Quarterly Gain; Trading Volume Soars

In the 1630s, certain Dutch tulip bulbs commanded higher prices than houses. At the peak of tulip mania, many were certain that this would be the investment that replaced boring old gold. They featured a limited supply and every sector of society was caught up in the frenzy.

By 1637 the tulip bulb market had crashed 99%. Gold was not replaced as the primary and most reliable store of investment value. For all that has changed in the past 500 or so years, and on the heels of huge 2018 trading volumes, gold is proving, yet again, to be a beacon of consistency and reliability in turbulent times.

Gold bulls are finding 2018 offers plenty of reasons to be cheerful.

Bullion’s wrapping up a third quarterly gain, a feat not seen since 2011, and exchange-traded fund holdings are near the highest in a half-decade. Haven demand may also get a boost with foreign-policy hawks in the ascendant in Washington.

Gold’s haven qualities have come back in focus this year as President Donald Trump’s administration picks a series of trade fights with friends and foes, and investors fret about equity market wobbles that started on Wall Street and echoed around the world.

At the same time, although geopolitical tensions with North Korea may be easing, Trump’s pick of John Bolton as his new national security adviser has spurred speculation of a potentially harder line against Iran.

Holdings in bullion-backed ETFs hit 2,268.6 metric tons last week, the most since 2013, data compiled by Bloomberg show. The hoard has risen about 43 tons this year, the eighth quarterly rise in the past nine. The dollar has weakened and global equities are set for the first quarterly fall since early 2016.